Attacks on net metering policy in Arizona have had a chilling effect that prevented one of the largest residential solar installers in the US from entering the market, according to a top executive at the company.
Brendon Merkley, chief operating officer at Vivint Solar, a subsidiary of the home security company, said that he had raised concerns at a meeting with the Arizona governor's office and had to cancel plans to lease operating facilities in the state.
“I told the governor's office that the rhetoric from the Arizona Corporation Commission means deferred investment from my company in the state,” he said. “I had a letter of intent on a lease on a couple of operating facilities in Arizona and I cancelled those leases. I didn't invest in the state because of that rhetoric.”
Arizona has recently been the focus of attacks on net energy metering policies. Last month, the state's largest utility filed a proposal with regulators that could almost double demand charges for solar customers and cut rates paid for solar electricity exported back to the grid from 12c/kWh to 4c/kWh.
In exclusive comments to PV Tech at the NPD Solarbuzz North America PV conference in San Jose, California, yesterday, Merkley said:
“The only big market we're not in is Arizona. The economic profile there doesn't excite me. With the recent noise from APS around NEM we've decided to take a wait and see approach with Arizona.”
Vivint Solar has grown rapidly since its founding in 2011. Last year, the company developed around 10MW of solar and has already installed a total of 50MW this year. In the first quarter of 2013, Vivint Solar was the second-largest US residential solar installer in Q1 2013, according to the GTM Research's US PV Leaderboard.
Last week, Vivint Solar announced that it had closed on two tax equity funds worth $200m to finance its business model, based on third party power purchase agreements. The identity of the investors was not disclosed. Vivint Solar now has 15,000 customers in Hawaii, California, New York, New Jersey, Massachusetts and Maryland.
Vivint security systems, based in Provo, Utah, has 800,000 customers, but Merkley said that they had yet to tap this existing customer base.
“We haven't yet targeted this goldmine opportunity,” he told delegates. “We tested our business model on creating new customers from scratch – we've done that to date and biding our time with the existing customer base. So far we're growing very rapidly with the organic growth and we think that's a really good opportunity to continue.”
Merkeley said that the $200m funds would allow the company to install “several thousand” systems but that the company was already trying to raise further funds to compete with SolarCity.
“The fun thing is in our very local markets we hyper focus on we're by far the number one developer for many markets, such as Hawaii, northern New Jersey and Boston,” he said. “SolarCity's footprint is larger, but we have the opportunity to be as big.”
Vivint Solar has differentiated itself from other TPO solar companies by offering integrated home energy and management systems.
“I perceive my business more like a Comcast or Verizon than I do a local electrician,” he said.